-- 11:00 a.m. in san francisco. investors on edge. what will the fed's beige book reveal? scarlet: oil prices resume their slides. pressure is building for chicago mayor rahm emanuel as the city faces a day of reckoning over its huge debt. good day from bloomberg world headquarters in new york. this is market that. i mark crumpton, here with scarlet fu. scarlet: little change in china overnight. seems to have halted the salting here for now. posting its first gain in three days. changethe adp implement -- employment change. if you look at treasuries consistent with that idea that

prices are down. 2.17%.year yield at a bit of a tentative risk on sentiment being felt with the two best-performing currency's giving back their gains. 112.dollar at producer prices sagged for a second month. the target of 2%, we are not getting it. mark: some breaking news. the fed releasing its latest facebook. that's beige book. : the federal reserve that the u.s. economy continued expanding at a moderate to modest pace in the

leaven of the 12 regional banks. in 11 of the 12 regional banks. book fromto the beige input and sales prices were up slightly. retail sales continue to expand. august,s closing in there is a bit of a cap in the economic news we have been saying. quadruped policymakers going to be a flimsy meeting september 16 , this will be a large portion of the information they are taking it. -- four of the policymakers going into the fomc meeting. we will also get jobs numbers from the labor department on friday. districts, the u.s. federal reserve is continuing to see modest to

moderate growth across the board. mark: phil mattingly joining us from washington. joining us now with their andtion, chris in studio kate moran joins us from st. louis. one of the sticking points for fed policymakers has been stagnant wage growth. are we finally starting to see some movement? chris: absolutely. we had some indication of faster wage growth and hourly earnings -- the eci until last quarter. it's nice to see it continuing to happen as janet yellen said, faster wages are a reason to hike. lower wage growth is not a reason to wait. isrlet: that facebook backwards looking.

week applicable to the ending august 24. what value does a beige book offer you when you have such massive repricing of every asset class? kate: it confirms what we've been seeing for a wild. the economy is picking up a bit of steam. it's one of the most recent indicators we have saying that growth continues through august. we've seen some of the market volatility during the time when the beige book was being written. we are seeing a situation where the fears are international, but if you look at the domestic economy, the trends are very positive. that is something that puts them in a situation where the stronger wage growth leads into stronger consumer spending. the fundamentals are positive for the market as well. mark: domestic economic data, we've seen strong numbers, but this volatility we have seen,

what are policymakers to do with that and how might that affect this anecdotal evidence coming from the beige book going forward? really like what bill dudley had to say about this last week. he explained the way the fed looks at volatile ane markets. the other thing he brought into it, there is often market fed turningre points because there is a certain amount of uncertainty. we look back at 2004 in 1994 and saw sharp stock market selloffs at that time. the market called down after the first couple of rate hikes. as long as we are not in the marketnd of fevered environment that we were in last week, they will most likely be able to focus on domestic economic stuff and go. scarlet: is an instructional for

you to look at what the market 2004 given 1994 and how different the global economy is now? kate: we think it is. look at the last four times the fed did its first rate hike, that's different than later on. it is as policy gets tighter and tighter that it slows economic growth. the last four times that the fed -- bonds also did well. confirming what we just heard, while stocks might sell off short-term, the fed possibly 's rate hike is reassuring that they are saying the economy is strong enough to withstand a quarter-point increase. mark: the retail sales expanding in most of the 12 districts. has the consumer now decided to jump back in full throttle and

get this economy going? chris: i think it has. nominal consumption has accelerated really nicely since the early first quarter nosedive. it would have been up even more -- gassecond quarter prices are falling now and that is even further reason to think that real sales will be better. we are looking at a solid consumer environment. i would echo that comment about the national versus international economy. the one place that fed may miss by not focusing on the national economy is inflation. with all this turmoil around the world, inflation is going to be lower than they think. when thinking about what the fed might do, you have to think about it in the way they think about it. which is domestic.

pointingindicators are at inflation. i think they will tighten. scarlet: i want to talk about the market's and overall. -- market's in overall. the uncertainty related to what the fed does next. we talked about the lack of liquidity in the fixed income market. what extent do you see any lack of liquidity in equities? k: i don't think there is a lack in equities. there is uncertainty about which direction markets will move next. short-term, there is this swirling uncertainty, we tend to see markets move up one day, down the next. nobody is sure what happens next until the day to begin to reveal and then we see it's which directions.

mark: nobody seems to be sure what happens next. when you were in the midst of this volatility, the moves that you make, are they more driven by data or psychology? we've had people come on and say it's a bit of both. chris: it is a bit of both. the fed has made it really clear. they will suffer from significant loss of credibility if they don't. september is a lot more attractive than december. if you look back at the last couple of years, we've had turmoil in the money markets. mostly because of regulatory changes. they make it hard for banks to hold short-term assets. you don't want your first rate to be met by observations of turmoil. get it done in september.

if we do still have market problems, wait until march for the next move. by getting off the ground, it gives you the flexibility. lowe and kate warne joining us from st. louis. scarlet: phil mattingly has had a few more minutes. what else to defined? -- did you find? phil: several of the districts reporting increased wage pressure. difference come a shift from past beige books. something policymakers will be taking account of. the u.s. economy expanding across most regions and industries in july and august. moderate growth reported by six of the 12 fed districts. modest growth by five others. seeing -- five

saying the dollar is having an impact on manufacturing. the big question for policymakers is what is going on internationally, what is happening in china. little acknowledgment of impacts of china in this report. the report gathered until august when he fourth. -- 24th. china have an impact in san francisco on wood and technology products. this ending in august 24 leaves out a lot of the turbulence we have seen over the past couple weeks. the beige book coming out positive. scarlet: thank you so much. phil mattingly in washington. mark: much more ahead on the bloomberg market day.

we are watching the market action in the last two hours of trading. dow industrials up 224 points. we will be back. ♪

mark: welcome back to the bloomberg market day. scarlet: u.s. stocks bouncing back after two straight down days. the dow taking aim at a 200 point advance. let's check in with matt miller. the fact that china has closed for trading for the rest of the week certainly helps as well. matt: absolutely. we are at session highs right now. it is not just two straight down days. we had the worst start to

september in 13 years and the worst august for the dow jones industrial average and 17 years. the dow with september 1 and august down 10%. it was really rough. the gains we are seeing now don't really make up for a lot of the losses. we are not seeing the volume we've been seeing over the past couple of weeks. i found an incredibly cool function. you can get this on any index. it shows you the difference in volume broken down by sector. there are 10 sectors on the s&p. the first one is the entire s&p. 11% lower today in volume at this time than we were over the last 20 days. financials are 18% lower. sectors that have better volume right now at this time than they did over the last 20 days were industrials and materials. everything else is rallying on

lower volume -- utilities are not rallying. even the drop utilities on lower volume that we have seen of the last 20 days on average. not a lot involving trading in this rebound. let's take a look at some of the actual individual movers. back -- youto buy decided to go out and try to buy billion. a couple according to sources we talked to, they are out of talks. they could not be on price. i want to move on to navstar. the biggest trucking company. a notice fromtten the sec about an investigation from 2012. as a result, it is down and it

also has a surprise third quarter loss. analysts were looking for a profit. go pro also not a good trait. there is a company that makes chips for go pro that helps it to visuals -- do visuals. this company came out a couple days ago and said third quarter doesn't look good. the outlook is bad. outlook cutting their on go pro. the stock getting hit. they think the stock is now worth $54 over 12 months rather than 70 and change. the outlook for q4 sales and all of 2016 not good. coming stock we've been talking about a lot. 2.2% on concerns that apple may be eating his lunch. netflix opened up yesterday in

japan and that pushes it towards its goal of being worldwide by the end of t2016. the stock has been crushed. we were up this morning from a positive mental 10:30 and the netflix just came down. -- positive until 10:3. scarlet: what was that function used? .att: svx you will see a breakdown of the index and all the sectors you can do volume -- a 10 day average, five day average. very cool chart from dale curtis. mark: let's take a look at the top stories we are following at this hour. president obama now has enough votes to declare victory on the iran nuclear deal.

it is now backed by 34 senate democrats. armor mikulski of maryland -- barbara mikulski of maryland joined in backing the plan. john kerry discussed the merits of the agreement today in philadelphia. john kerry: the key elements of the agreement will last not for 10 or 15 years as some are trying to say. or for 20 or 25. they will last for the lifetime of iran's nuclear program. mark: secretary kerry sending a letter to members of congress today. it outlines with the united states plans to do for security for israel. scarlet: weekend currencies may be able to some supplies. businesses that sell to sony can

take advantage if they are paid in ye or u.s.n dollars. mark: bloomberg news learns that a pair of drugmakers have abandoned negotiations. there were looking to take over aria pharmaceuticals. those talks broke down over pricing. a would havebaxalt at $2 billion. scarlet: the streaming video service will offer online tv without commercials for $12 a month. hulu is co-owned by disney and fox. shares of h&r block rising on this wednesday. they have announced a long

awaited share buyback plan. buying back $1.5 billion of stocks, 16% of its market value. those are your top stories at this hour. scarlet: coming up, how the feds command of their keyboard to nab criminals. ♪

scarlet: a smoking gun in the form of acronyms. mark: how prosecutors find and follow these leads using control f. starts with criminals always slip up, they leave behind fingerprints and a telltale afternoon. -- acronym. prosecutor, you suspect a hedge fund or another

financial institution of wrongdoing, could be insider trading. you go through thousands of e-mails and documents. where do you start? they start, one of the ways they can dig into these documents, they look for acronyms. tyop, talk to you on the phone. ldl, let's discuss life. to takeey are trying something off the official record. anylet: has there been instance in which connect has been enough to charge someone? >> it is a clue for them to dig further into a specific trade, a specific deal or a type of business line. it's not a way that they can produce evidence, what what it show they have intended to hide something, which is what they need for a

criminal prosecution on an individual. mark: you might see these transcripts of phone calls or whatnot. going with abody -- sometimes when people are committing wrongdoing , they are arrogant enough to think they might not get caught. >> we've seen that across wall street for the last two years. they had software programs which are amped up search functions, throughf to go thousands of documents where the stickies in and find them. -- stick these in and find them. scarlet: he would save phone me and instead of using the word fon.e, he would do so >> he was savvy enough to know

that maybe his e-mails were being searched. hide possibley to wrongdoing, which is why people want to take things off line or onto a cell phone. mark: a fascinating story. f forutors hit control suspicious acronyms. the story is on bloomberg.com. thank you so much. i am out. i'm not going to use any acronyms. scarlet: much more coming up on the bloomberg market day. dr. doom discussing the latest market place. we will be back. ♪

scarlet: welcome back to the bloomberg market day. that's get straight to the stories making news at this hour. cnn changing the rules for the next republican presidential

debate could the network will choose the participants by using the most recent polling. that could help someone like carly fiorina. she has surged in surveys. the next debate is 12 days from now. in puerto rico, there has been agreement on debt restructuring. puerto rico's main power company has reached an agreement with bondholders over almost $9 million in debt. bondholders would swap existing debt for new securities at a loss. -- $9 billion in debt. rental vacancies fell to the lowest in 30 years. rentals had increased almost 4% in july. white-collar workers are set for a big raise in 2016. -- wirelesss networking engineers received the biggest increase. 10%. salaries will rise by

pulled $27ave million in u.s. mutual funds in the last week because of the turmoil in financial markets. -- $27 billion. the investment company institute says and stock funds severed redemptions of $11 billion last week. bond funds saw outflows of $12.1 billion. stories. your top speaking of the markets, equities selloff leading up for today. -- letting up for today. investors remain on edge over china. earlier today, erik schatzker and matt miller spoke with marc faber. they asked him where he would invest in the world right now. marc: i think that because of modern central banking and a repeated intervention with

qe, all policies and around the world by central banks, there is no safe asset anymore. when i grew up in the 1950's, they would say put your money in the bank. the yields were low. it was safe. nowadays, you don't know what will happen next in terms of purchasing power of money. it is going down. anywhere, thern opportunity for large capital gains exists. the downside risk is limited. it would be the mining sector specifically, precious metals, shares.ompanies, gold stocks like look at

-- they haderican been hammered because of falling commodity prices. go downies may still for a while, but i don't think they will stay down forever. erik: are you effectively calling the bottom of the metal cycle? it doesn't sell like today is necessarily bottom, but how long will it take before we see the prices -- gold has already started to recover little bit. the base metals are in a disastrous state. marc: i would rather focus on precious metals. they do not depend on the asustrial demand as much base metals.

as i've indicated on this -- a yearey are go ago, the chinese economy was decelerating already, but the fund managers did not want to accept it and now, it's obvious that the chinese economy is growing at nowhere near what the ministry of truth in china's publishing. either no growth at all or maybe around 2%, but no more than that. that has a huge impact on commodity prices and in turn, has a huge impact on the economy of all the producers around the world from asia to rush out to the middle east to africa. these countries have less money to buy, including american goods. matt: we saw the chinese

evaluation and vietnam followed. do you expect to see a series of the evaluations -- the evaluations -- d evaluations? marc: lowering the value of the currency to create a depression in real incomes and a of gdp in dollar terms and the contraction of world trade in dollar terms, which is negative for economic growth around the world? matt: who is next? marc: the chinese will probably continue to let the currency slow down somewhat. to gain as a

currency, short the hong kong dollar. the hong kong dollar will not be revalued against the u.s. dollar. that is out of the question. currencyinese continues to weaken, then there will be a lot of pressure in and kong on asset prices maybe the government chooses to cushion the declining asset class, which would be stocks and real estate, through lifting evaluating the hong kong dollar. you must have a neutral or fairly positive view of what happens in china's future. marc: i think china is from a cyclical point of view now in a very serious downturn. serious.

, im a secular point of view think there is still a tremendous growth opportunity in china in the long run cyclically, they are going to have a hard time. scarlet: that was marc faber speaking with erik schatzker and matt miller earlier today. coming up, managing director of citigroup global markets talks about global oil prices. the biggest three-day rally in 25 years. following the biggest slighted tenures. tenures -- the biggest two-day drop since 2009. ♪

scarlet: welcome back to the bloomberg market day. the last few days have been quite a roller coaster ride for oil prices. crude prices fell 8% yesterday, reversing its biggest rally in 25 years. what is next? here's what ed morris told betty liu and alex deal earlier today. -- alix steel earlier today. and: probably in the 30's. it could hit a $20 level at some point as well because when there ,s no place to put inventory the front end of the curve has to come down. --will be seeing production in the 20's. betty: ok. we could see $20 oil. what about the prospect of iran? looks like the president will get this nuclear deal through.

we have some sound from the iranian oil minister who talked about what his country will do once the sanctions are lifted. ed: there will be a one-two punch on that. we have plans to increase production weekly after the sanctions are lifted. or fiveur months months, we plan to increase another half-million barrels. ed: which leads to a timeframe to look at -- we will have a signal about where sanctions are going by the middle of december. the iranians have an election in february. they would like to commit to all forthings they have to do inspections. sometime in january, the market will expect the million barrel increase.

should all talk about fair prices for opec. but i will keep pumping. don't you worry. they also said we will do this at any cost. alix: betty was talking about image reason the u.s. what is the concern of a global product glut? turning crude into products we are not using. ed: we are in a funny position because all product do not look like. we've had a tremendous buildup of refining capacity globally. refiners in india and china and the middle east were there is a huge buildup of capacity. -- it that 55% of diesel wants gasoline. we've had a shortage of gasoline in the summer led largely by the shutting in of european

refining capacity. wheezed to import one million barrels a day from europe. -- we used to import one million barrels a day from europe. betty: i believe they've come up with a report where they sent demand will finally catch up sometime in the fourth quarter of 2016. do you think that is credible? ed: it is based on one big assumption. where is global gdp going? if we get recovery in china and other emerging markets like brazil and we do not collapse here -- if you are an optimist, the end of q4 make sense. if you are a pessimist, it will be 2017. we will stick with the

commodities complex right now and bring in alix steel. we saw oil take a deep dive earlier today, extending yesterday's drop off. then come and came back a bit and is now up 2%. it has been all over the place when it comes to oil. what are you hearing on that thet in terms of what inventory numbers say for the sustainability of oil prices? what we saw around 10:30 when the inventory numbers came out, undeniably bearish for crude. shut in some of their operations and we did see a product build. ed didn't talk about the dislocation between the gasoline and diesel. lower by 120,000 barrels a day, which should have

been a more bullish signal. a lot of that was in alaska. it was not in the actual shale regions where we need to see production slow. iran has been saying we will plan to produce a much less as much as 4 million barrels a day. they need the money no matter the price. the fact that opec would come in you go ahead and pump whatever you want, no worries, we will cut back. that seems unrealistic. overall, the market dealing with an oversupply. we saw some upside in the f facebook. a little boost in wages. -- in the beige book. scarlet: there is too much supply. we have tons of it.

copper and aluminum plunging to six-year lows. declining for a fourth month. a lot of this is about oversupply. that is not the case for every single metal out there. alix: no. standard chartered cut their thecast for aluminum -- only metal with a peak supply is copper. overall, inventories and stocks remain pretty low. i've been hearing that from a lot of analysts. there is a lot of speculation and sentiment moving copper rather than fundamentals. a lowers dealing with grade. the copper you're getting is not that great and that is causing supply issues as well. scarlet: thank you so much. alix will be back to take us through the market close as we

look to close out higher with an hour and 15 minutes left. areks in the meantime bouncing back after a monstrous a lot yesterday. we had now to david for a quick check on where we stand right now. points,he s&p 500 up 17 almost a percent. see's elliott says april is the the dow jones -- up 1.05%. 1.25%.daq up on it has been tracking with the market well throughout the day -- oil has been tracking with the market well throughout the day. i want to vivid to talk about the 10-year note.

people buying into equities. the tenure keynote -- 10 year t note -- companies added 190,000 jobs in august. 10,000 less than economists had forecasted. , want to talk about one equity h&r block, the biggest tax preparer in the u.s. having the biggest day among the stocks on the s&p 500. 2.5%.up back to you guys. scarlet: thank you so much for the latest on the markets. let's get you a look at the top stories at this hour. we begin with company news and rose 23% with asia leading the gains. we talked about the potential

for the second half with the cfo. licensing products give us a good proximity -- within the first half of this year, my craft, drastic world -- mi necraft, jurassic world. with the star wars movie coming , we had a 15 year relationship. scarlet: lego continues to see very strong double-digit growth in china and will continue to invest in the region and increase its consumer research. some controversy over the new will smith movie, "concussion." not that the movie was -- according to dozens of e-mails, sony pictures deleted or changed some moments that

were critical of the nfl. is planning tog move his new york studio somewhere else once his contract ends with disney next summer. he has one more project with the fg, based on the roald dahl.led a those are your top stories. coming up on the bloomberg market day, pressure building for rahm emanuel who faces a day of reckoning over chicago's debt load. ♪

scarlet: time of fiscal reckoning for chicago. it now has a deficit of $20

million. chicago has put $7.3 billion less into the pension funds than actuaries recommended. -- that had adebt ripple effect on chicago bonds. joining me is casement -- kate smith. rahm emanuel needs to come up with some ideas. his options are pretty limited. k: they are getting really limited and fewer by the day. the first move was to go to the for pension reform. that was a big fat no from the state. that was when you saw the moody's downgraded. holding campfire meetings. -- more tore out explain the situation they are in. next year, when they see their kapok bus route is cut, they

know what's going on. --t their kid's bus route next year, when they see their kid's us route is cut, they know what's going on. .eople are not happy they are chanting, they are going. it is a dire situation. these are essential services that have to get cut. scarlet: this means some kind of reform is necessary. is there a way to implement pension reform? have island and new jersey successfully. kate: they went up to the state and the state set up. no one in illinois. it doesn't seem like they will get any relief from that because

it has already been appealed. it is looking like a no. scarlet: what are the options for rahm emanuel? what can he do now to raise the much-needed cash? kate: either raising taxes by quite a bit to start to close that budget or cut spending. cutting spending is not really getting met with a friendly face. it's looking like taxes. it's important to remember chicago is a very viable city. once you start raising taxes to a high level, you are fretting that. -- threatening that. scarlet: the competitiveness of the city goes down. what about market access? the fed will raise interest rates in september possibly. for now, rates are low and chicago should be able to borrow money cheaply. te: he doesn't seem like that will be an option, either.

these public schools attended to tap the market. the market stood back and said we are not so sure about this. it got delayed for three weeks and then came extremely expensive. now, they're waiting until the end of september when the mayor has to come up with a spending plan. sounds like the market is going to wait to see what their plan is before they borrow money. scarlet: thank you so much for giving us the lowdown. much more coming up on the bloomberg market day. ♪

and. the unknown unknown.

scarlet: as oil prices resumed their slide, actually -- they are going to turn around. alix: when it comes to a rate hike, bill gross says a fed move might be too little too late. scarlet: when it comes to tech .pos, you are looking at uber i am scarlet fu with alix steel. alix: we see a rally underway. we are holding onto gains over 1%. stocks got slaughtered yesterday. got slaughtered yesterday, but the idea that things are calm is just temporary. china is closed for the next two ay